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Gold price increases drastically when inflation increases and social conflicts are feared by the population

When to buy gold ? Will gold price go high ? What will be gold value ? Should I buy gold ? Gold rate go down ?
Throughout the year, gold prices have been steadily increasing. Gold was selling for $1410 p/oz in 2010 and has increased to $1650 p/oz in August 2011. The price of gold has increased fourfold in the past ten years and has continued to rise every month since 2008. The US Fed has been saturating the market with dollars, which is the main contributing factor in the increasing gold prices. The price of gold is measured in dollars so an increase in available dollars results in an increase in gold prices.

The recent increase in gold prices does not reflect a consistent trend. The price of gold decreased from $590 to $327 in 1985 and then dropped again fifteen years later to $273. In 2005, however, the price increased to $513 and then went on to double by 2010. The main indication of the market value of gold is the supply of dollars but these fluctuations in price indicate that there are a number of factors that can have a significant impact on increasing or decreasing the price of gold.
The London market determines the selling price of gold daily. However, the price is strongly influenced by supply and demand. When there are more buyers in the market, the price of gold increases. Only one quarter of gold is actually purchased by banks, investors and traders. The rest is sold to dentists and to be used in the production of jewelry. Gold mined and sold in recent years can be adjusted for commercial purposes if necessary because it is very liquid. Because of that, the price of gold is not affected as much by the rate at which it is mined.

The price of gold is also impacted by the trade agreements between countries. No more than four hundred tons of gold can be purchased by the United States and other member countries that belong to the Central Banks of Nations in a single year. This agreement is due to the Washington Agreement on Gold. This shows how the price of gold can fluctuate due to trade agreements. The price of gold can also be influenced indirectly by interest rates. If interest rates are increased by the banks then the price of gold will decrease. If interest rates are decreased, then the price of gold will increase.
The demand for gold increases drastically when inflation increases and social conflicts are feared by the population. People tend to increase their supply of gold to be used in a situation where paper and coin money might not be viable currency. When this happens, and the demand for gold increases, the price of gold increases as well. Gold prices can also be influenced in the stock market as attempts to make a profit by short selling gold are used.